Industry sources and analysts say Australia's vast reserves of the obscure metals with highly prized properties could make it one of the world's leading producers in just a few years.

"By about 2014 we should be one of the dominant suppliers of rare earths to the world. And we will compete with China for that," a long-term investor told AFP.

"We're a small country but we're going to be the Saudi Arabia of rare earths."

World attention shifted to Australia's nascent rare earths industry after China, which dominates global production, began restricting exports, sending shudders through major consumers Japan, Europe and the United States.

Australian experts say China has simply used up its tightened annual export quota, playing down fears of a trade embargo on high-tech producer Japan over a bitter territorial dispute.

But the scare triggered a rapid reappraisal of rare earths sources other than China, which cornered the market with about 90 percent of global supply but now needs growing amounts for its domestic market.

Rare earths like super-magnet dysprosium and red-glowing europium are vital components in hard-drives and computer screens, while the metals also make possible laser missile systems, wind turbines and solar panels.

"We touch rare earths every day of our lives but people are not aware of the applications they're in," said Matthew James, vice president of corporate and business development at Australia's Lynas Corporation.

"They are underpinning societal trends which are not going to reverse. We have to become more energy efficient, we have to become better in managing our environmental footprint.

"People are not going to accept larger, clunkier devices, they want smaller, faster, lighter. These are trends which are driving growth in the rare earth market."

The United States, fearful of further restrictions from China, is scurrying to resume production, while Japanese companies, leading makers of flat-screen TVs, digital cameras and smartphones, reportedly turned to Lynas.

"Japan should diversify its supply and better manage risk in the long run. It's awkward to rely on China for 90 percent of its supplies," said Toru Taniuchi, a professor at Japan's Teikyo University.

"But the interests of buyers and sellers have to meet in order for new entrants to the market to succeed," he warned, referring to Australian suppliers.

Lynas, among five companies with proven Australian deposits, according to www.australianrareearths.com, will next year be the first Australian producer to come on stream when it shifts some 11,000 tonnes from a new plant in Malaysia.

The company will double output to 22,000 tonnes a year by the end of 2012, worth about 1.1 billion US dollars at current prices.

James said Lynas had about 1.4 million tonnes at its Mount Weld holding in Western Australia and could be selling to China within a decade as the giant country's supplies dwindle in the face of rocketing consumer demand.

He believes Lynas is two to four years ahead of any other producers outside China because rare earths projects take several years to develop. The Lynas project has already been eight years in the making, James said.

"With the resource constraints in China, China's own growing demand and China's desire to improve the efficiency of their own industry, we think China could be a net importer of rare earths in five to 10 years' time," James said.

The rare earths investor, who preferred not to be named, said there would soon be a "real focus" on Australia, which has 46 percent of the world's rare earths deposits.

"Nobody has really worked out, until maybe the last week or so, Australia's position in it all," he said.

"When you look at the international literature about scarcity of rare earths you see a mention of Australia, but nobody has an understanding that we've got 46 percent of the world's supply.

"And that we've probably got the richest and best deposits in the world. I don't think anybody ever contemplated that and I think that's just starting to dawn now."

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